The impact of the EU Energy Support Package in Kosovo

Responding to the energy crisis that hit Europe and the Western Balkans in 2022/2023, the European Commission came up with the Energy Support Package launched at the Berlin Process Summit on 3 November 2022. The package aimed to address immediate, short- term and midterm needs in the Western Balkans. To learn more about the impact of the package in Kosovo, its biggest achievements and its long-term impact in the region, we reached out to Johannes Madsen, the Head of Cooperation at the European Union Office in Kosovo, who provides all these details in the interview below.

What was the primary goal of the Energy Support Package and what was the scanning of the situation in the region at large and in Kosovo in particular, that surfaced the need for such an intervention from the EU?

At the Berlin Process Summit of 3 November 2022, the European Commission put forward

an Energy Support Package of 1 billion euros for the Western Balkans. The package aims at addressing immediate, short-term and midterm needs in the Western Balkans in the context of the energy crisis that hit Europe and the Western Balkans over 2022/23.

With this substantial support, the European Commission aims to help the Western Balkans region to begin decreasing their dependence on Russian fossil fuels, accelerate the de-carbonization process, and improve the energy security of the region.

In terms of immediate measures, the European Commission provided 500 million euros in budget support to the Western Balkans of which 75 million euros to Kosovo to help mitigate the impact of increased energy prices on vulnerable households, businesses (small and medium-sized enterprises) and support policy measures to accelerate the energy transition.

The Energy Support Package was designed based on the specific action plans of the Western Balkan partners outlining how the governments intended to address the energy crisis through a mix of reforms and policy measures, as well as direct assistance measures to vulnerable families and small and medium-sized enterprises. 

With regard to short and midterm measures, the European Commission provided a further €500 million to the region under the Western Balkans Investment Framework (WBIF) to advance the energy transition and energy security of the region.

What were the phases of the Energy Support Package disbursal in Kosovo and what were its target groups?

As per the Financing Agreement of the Energy Support Package, 90% of the total amount (€67.5 mil) was already disbursed to the Government in March 2023, and the remaining amount, 10%, will be disbursed during 2024.

The Action Plan of the Energy Support Package foresees five main measures that are implemented by the Ministry of Economy, the Ministry of Finance and the Kosovo Energy Efficiency Fund. Each measure has its own target group with quantified indicators of achievement. In particular, the measures aim at:

●  Providing direct financial support to the most vulnerable and socially disadvantaged households for the winter period;

●  Incentivizing energy-saving behaviour of household consumers by subsidy to cut monthly electricity bill;

●  Providing grants to individual household consumers including vulnerable consumers to increase the energy efficiency of residential units and buildings and to invest in energy-efficient household appliances and renewable energy systems;

●  Incentivizing energy savings of micro, small and medium Enterprises with grants for efficient heating equipment and efficient working equipment;

What was the response of the beneficiaries of the respective phases of the Energy Support Package?

So far, as per the Action Plan of the Energy Support package, the Ministry of Finance provided subsidies to vulnerable consumers for electricity bills and for wood fuel, and subsidies to consumers that saved energy during the period 22 December 2022  – March 2023 compared to the same months of the previous year. Thus, almost 200.000 households who saved electricity have benefited from subsidies in their bills for that period.

In September 2023, the programme for protection of the vulnerable consumers through subsidies for their electricity bills was launched. Over 40,000 families (or around 200,000 persons) have applied, whereas the call for subsidies for wood fuel to vulnerable consumers was launched in December 2023 and the number of applicants is not reported yet.

The Ministry of Economy has launched and managed two calls for subsidies for the households: for the solar water heating systems (20 applicants) and for efficient home appliances (washing machines, dishwashers, fridges) around 5,000 applicants. Furthermore, nearly 15,000 applicants applied for efficient heating equipment such as heat pumps, biomass boilers and stoves. The call for solar photovoltaics will be launched in the coming months.

The Ministry of Economy has also launched the call for heating equipment for small and medium-sized enterprises on 22 November 2023. The aim of the measure is to support around 1,000 businesses on energy efficiency measures.

The Kosovo Energy Efficiency Fund has approved over 2100 applications for thermal insulation measures of single houses; in addition, the energy efficiency measures in 28 social housing buildings with 785 families are almost ready for implementation in 2024. 

What is the tangible impact of the Energy Support Package in Kosovo?

In the short term, vulnerable consumers can overcome the high energy bills during winter time, while households and businesses will have lower bills to pay due to energy savings. Furthermore, a great impact was achieved by raising awareness about new heating technologies, and the role of photovoltaic solar systems in the energy supply of homes and businesses. To be highlighted is also the impact on the economy through business opportunities for the private sector and the improvement of supply chains for various equipment.

How do you foresee the long-term impact of the Energy Support Package in Kosovo?

In the long term, the impact will be about policy development aligned with Energy Community requirements such as the National Energy and Climate Plan and legislation aligned with the EU Clean Energy for All Package, so that the legal and regulatory framework created will attract investments in the sector and boost the process of de-carbonization of the economy.

How many beneficiaries have there been in the phases of the package implemented so far?

Over 250,000 households have benefited so far from the various measures foreseen in the Action Plan of the Energy Support Package.

What were the priorities of the call in terms of support? Was it a priority to support beneficiaries to purchase specific energy-efficient equipment or rather support to adapt energy efficiency in the policies of benefiting entities?

Support is provided for purchasing equipment in order to have a direct impact on the reduction of energy consumption and energy bills.

What is the duration of the package, and how many more groups will it target? Is there an extension of the implementation period to be expected?

The implementation of the measures foreseen in the Action Plan of the Energy Support Package is planned to be completed by the end of 2024 or, the beginning of 2025. No further extension is planned so far.

Seeing as the package is implemented throughout the region, how will the results of the package in each country impact the region in general?

The Energy Support Package will have an impact on the reduction of dependence on fossil fuels, thus improving the security of energy supply and on reduction of greenhouse gas emissions as a result of energy efficiency investments. In the longer term, the region will have policies developed for a just energy transition towards carbon-neutral economies.